Apparently, the Susquehanna Financial Group (sucksawhata?) says that selling 5 games for every Xbox 360 console is too high.

The bean counters find this number troubling because a very high attach rate usually matches the shopping habits of hardcore gamers, a group too small to sustain a mass market gaming console.

Analysts like to see lower attach rates that coincide with casual gamers buying into a console, and buying one or two games, because this would reflect that a console maker is gaining ground in the marketplace. The folks at Susquehanna go on to explain that the Sony PS3 might experience similarly high game-to-console ratios, because of a shortage of consoles to penetrate the market.

The report concedes that growth in attach rates and high rates early in a consoles cycle can be good, but if it doesn't even out over time it might indicate that a console is stalling at retail.

Or maybe it just means that there are a lot of fun, compelling games for the Xbox 360? I may be an idiot here, but 6 million consoles ($1.8B in console sales) x 5 games a pop = 30 million games. Multiply that by an average MSRP of $49.95 = $1.5B for the industry. Tell me again... how exactly is that bad?

Comments

Dez said:

There are other reasons why more games may be sold, perhaps as is my experience the 360 is now more likely to be in the living room connected to the houses only HDTV. As such more than one family member is likely to buy games for it!

A high attach rate is troublesome. You don't want to see that high of an attach rate just yet for primarily one reason -- you want to see evidence that the console is reaching a critical mass. If its getting a high attach rate early on in its life, it normally means that the product is only being purchased by those that are either a) loyal to the company, or b) into what the product is (i.e. the "hardcore gamer"). This is completely sound and logical reasoning.

I'm a little worried myself that I'm seeing a lot of Xbox 360 consoles well into Black Friday at a lot of retailers. And these aren't the core systems, its the premium too. I would have been more confortable seeing far less units than I did. Yes, they're sold out at BBY, CC, Target and Wal-Mart, but I was still seeing them at secondary retailers.

This may be a signal that it is time for Microsoft to make a move on its pricing to attract a broader base. I think a 10-15 percent cut in the prices of both systems would be real smart. Their bill of materials has to be signficantly cheaper than launch now that they're a year out.

November 24, 2006 10:16 PM

Danny said:

The idea that you don't want to see a high attach rate "just yet" for a console is absolute bunk. Consoles only attract hardcore gamers at first (until their price points drop - the reason the original Xbox made any inroads at all is because the PS2 hadn't reached the mass market that it would eventually) and the attach rates reflect that. (The Wii has smartly put itself at mass market price out of the gate.)

The idea that this is a problem totally misses that main problem with the Xbox OG was developer support. There were not a lot of exclusives compared to Sony. Halo essentially made the platform. The high attach rate now means is that developers are going to continue to move to the Xbox breaking Sony's grip because they see that people are buying games and accessories for it. This is evidenced by the recent defections of formerly PS3 exclusives. This is great news for the 360 because games, games, games...are what matter. Just look at what GoW has done.

Microsoft isn't dropping the price until after Halo 3 is out and by then they will be in a great position to move mass market.